Partners to export LNG from Elba

BiS Connect

For more than a decade, imports of liquefied natural gas have come into the LNG terminal at Elba Island in the Savannah River to be transformed back into gas and transported along a pipeline to the Southeast U.S.

Now, with vast new reserves of domestic shale gas – the result of a hydraulic fracturing process known as fracking – filling the country’s domestic needs, the opportunity to export natural gas has companies looking to reverse the process.

On Monday, Shell US Gas & Power LLC and Southern Liquefaction Co., LLC, a Kinder Morgan company and unit of El Paso Pipeline Partners, announced plans to develop a natural gas liquefaction plant at Southern LNG’s Elba Island Terminal.

Construction is expected to start in the next few years, with the first exports flowing out by the end of the decade.

Subject to various corporate and regulatory approvals, Shell and Kinder Morgan affiliates have agreed to modify the Elba Express Pipeline and Elba Island LNG Terminal to physically transport natural gas to the terminal, liquefy it and load it onto ships for export.

In June, Southern LNG received approval from the Department of Energy to export up to half a billion cubic feet per day, roughly equivalent to 4 million tons of LNG per year, from the Elba Island terminal to Free-Trade-Agreement countries. It’s one of 17 facilities that have received such approval.

“Kinder Morgan is delighted to be working with Shell at Elba Island on this project, which has already received Free Trade Agreement approval,” said Kinder Morgan Chairman and CEO Richard D. Kinder.

“This project will facilitate further development of the abundant natural gas resources in the United States and will be a positive factor in the overall balance of trade between the U.S. and other countries.”

In order to begin exporting, Southern LNG expects to construct more than $1 billion of liquefaction equipment at Elba. The existing regasification equipment would remain, allowing the terminal to import liquid natural gas, re-gasify it and send it out via pipeline as it does now or, with the new equipment, reverse the process for export.

“The potential benefits of a liquefaction project to the local community could include employment for hundreds of skilled trades workers during construction, additional full-time terminal personnel once operational, positive financial impact to local businesses and governments from the additional contract workers living and working in the community, and additional significant ad valorem taxes for Chatham County,” said Kinder Margan spokesman Richard Wheatley.

Once finalized, Kinder Morgan, through El Paso Pipeline affiliates, will own 51 percent of the entity and operate the facility. Shell, through its affiliates, will own the remaining 49 percent and subscribe to 100 percent of the liquefaction capacity.

“This announcement underscores how the abundance of natural gas in the U.S. is changing the energy landscape,” said Marvin Odum, President of Shell Oil Company.

“With a measured, phased approach, exports of cleaner burning natural gas can help meet the world’s rising energy needs while also giving a boost to the U.S. economy.”